2011 Federal Income Tax Brackets: IRS Marginal Tax Rates

The 2011 tax year promises to be one where there will be some significant changes to the marginal tax brackets. What those changes exactly will be still remains to be seen.

There seems to be a couple of scenarios that people think are more likely to happen.

The 2001 Bush tax cuts could be allowed to expire. If they aren't renewed there will be a tax increase for all the tax brackets (yes, ALL TAXPAYERS got a tax cut from the Bush tax cuts, not just the rich)

They could renew the tax cuts for those making less than $250,000, and allow them to expire for the high income earners as was proposed in the 2010 budget.

Of course they could do something different than both of these options as well, but we'll just have to wait and see what they decide to do.

So according to this projection, the tax rates will be increasing mainly for those who are making 192,000 dollars or more.

Reinstate 39.6 percent rate in 2011

Increase the 33 percent tax rate to 36 percent and change the thresholds for that tax bracket in 2011.

UPDATE: The Bush era tax cuts have been extended for 2 years, and the tax brackets for 2011 will essentially remain unchanged except for some changes to the bracket ranges due to inflation, and minor changes in standard deduction levels. The final 2011 Federal Income Tax Brackets appear below.

2011 Tax Brackets

Single

Married Filing Jointly

10% Bracket

$0 – $8,500

$0 – $17,000

15% Bracket

$8,500 – $34,500

$17,000 – $69,000

25% Bracket

$34,500 – $83,600

$69,000 – $139,500

28% Bracket

$83,600 – $174,400

$139,500 – $212,300

33% Bracket

$174,400 – $379,150

$212,300 – $379,150

35% Bracket

$379,150+

$379,150+

What are your thoughts on the changes to the 2011 tax brackets? Tell us your thoughts in the comments

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Comments

I don’t change tax brackets so this doesn’t really affect me. However, it will be interesting to see what will happen if the 2001 tax cuts will be renewed or not. Is there a date that the decision has to be made by?

Sir, the tax increase is for people making $250,000 a year and more. They can afford to pay a little more. They will not hurt. Your argument is faulty. I know, I make that. I think it is my duty to pay a little more since I AM FORTUNATE enough to be making this money. Trust me, this tax hike will not hurt anyone, only increase revenue for the state. VERY NICE JOB OBAMA.

Just because someone can afford to pay more in taxes, doesn’t make it the right thing to do. Higher income earners are already paying more than their fair share of the taxes in my opinion. Also, I’m sure you’re fortunate, but I have to believe that you may have worked hard for your money as well – it wasn’t just handed to you?

also, it has been shown again and again – that increased taxes doesn’t always mean increased revenue. Sometimes the higher income earners hardest hit by those tax increases are small business owners, who end up not being able to hire as many workers, or laying off workers. And many of those workers – while they’re not getting a tax increase – will still be paying for them.

@ Marcus Brown, can you please explain how my argument is faulty? Do you honestly believe that raising taxes in this economy is an intelligent move?

I think economists have demonstrated enough times that tax revenue generally goes down with a tax increase!

And for you to determine that because you THINK that someone can afford to pay more taxes, they should means you are not looking at the full picture. What happens when you tax small business owners (who do the majority of the hiring in this country) to the point where they can’t create the new jobs that you need to get out of this recession? This doesn’t even consider the negative effect on charitable giving and philanthropy.

The “rich” already pay the majority of the taxes in this country, and we have about 47% of our citizens not paying a dime in taxes (and many actually getting large checks from the IRS)! The higher taxes (we are already #2 in corporate taxes in the world) will eventually dissuade well-off people from moving to or living in this nation. This is exactly what we are seeing on a state level – people moving from NJ & NY (and other places) to FL and TX because of state taxes!

Sorry, but that just isn’t true. along with this “flat” tax, would be a standard deduction, just as there is now. For arguments sake, we’ll say it is about 20k for a family. the flat tax would then be 15%.

Family A – makes 25k. they would be taxed 15% of 25 – 20 = 5k. that is $750 for an effective tax rate of 3%

Family B makes 200k they would be taxed 15% of 200 – 20 = 180k. that would be $27,000, or 13.5%.

Right now you have no idea what the taxes the rich versus the poor pay. The rich got that way by working hard and being smart. That means they know all the loopholes in our current ridiculously complex and idiotic system. The poor on the other hand don’t. The rich shelter their money, invest it, find clever deductions etc. They don’t end up paying 35%.

The poor on the other hand have no idea how things work and just pay the taxes in their bracket.

This system is far more fair, and would also help productivity as the smart hard workers in our society could spend their energy on useful projects instead of finding out how to keep the government from taking all their money.

what do you mean? I think this is far closer to being equal than our current plan. Everyone gets taxed the same percent on the income that gets taxed.

I’m simply presenting it in a way that appeals to people who aren’t educated on the subject. While I’d be fine with taxing everyone equally, that isn’t something that is likely to be passed. Adding in the deduction, you can present it in such a way that is acceptable to more people.

I have my opinions, and things I’d like to see happen in our government. I’m a realist though, so I am ok with working towards a better solution even if it isn’t perfect.

@ Financial Samurai – I love the idea of a flat tax and have been pushing that ever since I took my first economics class in college. I think it makes the most since and would definitely simplify things (plus it’s the biblical model)!

Although the increased taxes would not affect me, it’s still a shame that just because people make more they have to give more to the government. What people don’t realize is how many small business owners are the ones that are in the $200,000 and up tax bracket and trying to keep their business alive. Charging them almost 40% in taxes is not helping them at all.

For some reason our country has become one were people think they are owed something. The only thing I am owed is what I work for. People who are making $200,000 or more a year just didn’t start making that money without working at it. I just don’t believe in spreading the wealth. Go make your own wealth!!

If Congress does allow the Bush cuts to expire, it will be those in the 10% bracket who will see the largest increase in their taxes. 50% increase for those lowest income families and individuals. All the other tax brackets should think twice before complaining. The ones who can afford it the least, will be the ones hurt the most.

The wealthies americans do pay the vast majority of taxes in our country and a nearly 40% tax rate is extremely high when compared to the 10 or 15% rate of lower incomes, but a flat tax for everyone regardless of a standard deduction would be ridiculous. I believe the wealthy should be entitled to their hard earned money but I also know that I worked much harder when I was making $4 an hour when I was younger compared to the 70k/yr I make now. There is a growing division between the middle class and upper middle class compared to the 40’s 50’s and 60’s. I don’t believe this division is occuring because the upper middle class is working so much harder, it’s that they have more opportunities in life (investing, education, etc.) This division has been shown in other societies to cause a higher level of unrest and violence. I don’t believe in socialism but everyone must pay their dues.
I know people who work extremely hard to get ahead who don’t have health insurance or a solid career only to keep getting pushed back down. I’ve been extremely blessed to have a good career early in my life with nothing but a bright future ahead of me. I have no problem paying extra taxes if I end up in the 25% bracket. And if I end up fortunate enough to land in the 40% bracket so be it I will purchase several rental properties max out my 401k for tax write offs and deferrals and thank the lord for the opportunity to live in a country that has allowed me to prosper.

And remember that this doesn’t include the self employment tax that small businesses pay. My father-in-law pays 50% of his income in taxes when you include all taxes. He makes just at $250,000. He employs several people.

I work with the government and I can tell you first hand that reckless doesn’t even come close to describing how the government views spending.

The government doesn’t “pay down” debt. It simply increases spending. Why? Because agencies are told to spend every cent they get. Because if they don’t, their budgets in out years are cut.

If we want to see real savings, the policies and mindsets allowing this to go on need to be completely changed.

I’ve never understood why successful people (i.e “the rich”) are responsible for fixing government’s screw-ups. And how the media plays to that tune.

I just got my first Paycheck for 2011, and I observed that my Federal Tax has increased by about 11 Dollars. Based on this article, the Federal Tax should have reduced or stay the same. I earn around $85K per year, paid Biweekly. Can anyone tell me why should the Federal Tax should increase?

Where is the 11 dollar increase in your taxes showing? I’m interested to know. Was it in the taxes portion somewhere, or was it in something else like a pre-tax health care premium? I know our health care premiums went up, resulting in a smaller paycheck. Also, since some tax credits expired (making work pay credit), and new ones were passed, you may get less under the new 2% payroll tax holiday – or you may get more. It just depends. So basically – it’s hard to say why yours went up without knowing the details.

I too had just received my first paycheck in 2011 and my Federal withholding increased exactly $20.00 this pay period. Luckily the lovely state of CA had to reduce my withholding so the net loss to my check was $10, but Im still unsure why the fed withholding increased????

Not sure if this applies to you folks, but here’s one explanation I’ve found online for why some folks will see an increase in taxes:

The Making Work Pay credit expired on December 31, 2010; therefore the 2011 income tax withholding tables do not reflect this credit. As a result, employees in a lower income tax bracket may see an increase in their tax withholding amount, while employees in a higher tax bracket may see a decrease.

So, as mentioned above in a previous comment, the expiration of the Making Work Pay credit could lead to an increase for some people.

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